CLP reviews mainland nuclear investments

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CLP Holdings is reviewing its mainland atomic power investments following the nuclear crisis in Japan and Beijing's rethink on its own nuclear policy.

A spokeswoman for CLP said new investments, including a potential 11.9 billion yuan (HK$14.1 billion) stake in the Yangjiang nuclear project in Guangdong, were subject to review. The crisis in Japan and Premier Wen Jiabao's surprise decision to put a brake on approving new atomic energy projects across the mainland have put a cloud over CLP's plans.

Over the past two years, CLP chief executive Andrew Brandler has said the utility is moving away from coal-fired power stations in favour of nuclear and wind power projects on the back of China's plan to boost clean energy sources to combat carbon emissions.

CLP's appetite for atomic energy was underscored in a memorandum of understanding it signed with state-owned China Guangdong Nuclear Power Holding Co in July last year on the potential purchase of a 17 per cent stake in the Yangjiang plant.

The plant is one of the mainland's largest nuclear power projects, costing 70 billion yuan and due for completion in 2013.

CLP already has a 25 per cent stake in the Daya Bay nuclear plant in Guangdong, which was China's first, commissioned in 1994 and controlled by China Guangdong Nuclear Power. Seventy per cent of its output feeds Hong Kong's power needs.

'CLP's investments in new projects may be delayed,' Citigroup analyst Pierre Lau said in a research report.

On Wednesday, the State Council said the nation would freeze approval of new nuclear projects, review its energy policy and conduct safety checks on existing plants.

The CLP spokeswoman said CLP had yet to make any decision on its nuclear power strategies as the crisis in Japan was still unfolding.

The head of utilities research at Samsung Securities Asia, Gary Chiu Wing-fai, said CLP had to expand outside the matured Hong Kong market, but had little investment options on the mainland.

CLP needed to cut its carbon emissions to meet its target by 2020. 'Wind power is competitive, while coal-fired power is pollution-inducing,' Chiu said. 'CLP is likely to go ahead with its nuclear investments across the border.'

Environmentalists have described the Daya Bay and Yangjiang nuclear plants as hidden bombs in Hong Kong's backyard.

'My parents and children live in Hong Kong, which is within 50 kilometres of Daya Bay,' an analyst with an Asian brokerage said. 'If I had a choice, I would never want to have a nuclear plant in my backyard.'

Last Monday, the National People's Congress approved the state's nuclear strategy outlined in the next five-year plan. But the State Council unexpectedly put new projects on hold two days later. Despite this, analysts believe nuclear power will remain a key energy source.

There are at least 34 new plants that have been approved by the State Council and 25 are under construction.

CLP shares fell HK$1.15, or 1.8 per cent, on Friday to a six-month low of HK$59.95.